FML 1.96% 25.0¢ focus minerals ltd

am i allowed to post this??

  1. 35,268 Posts.
    lightbulb Created with Sketch. 73
    I thought this was interesting - hope he/she is right - it sure has big ramifications for fml if true

    After all if we aren't a quality junior I don't know what is.


    it is message Post #: 4886581 from author nk on code gold


    "the gold stocks move to a different beat than gold

    part of the reason is that the market won't factor in the margins earned from a higher gold price until the market is confident those margins can be maintained

    once that happens the gold stocks then , as a group, tend to rise strongly to price in the new margin. They do this after gold has moved.

    if you look at the current gold price many brokers use for long term gold is is often around US850. If you increase that to current spot, which is what I would expect they will do over the next 12 months , the effect on valuation is dramatic

    a classic example is of this is:

    http://www.silverlakeresources.com.au/files/files/211_Holst_Report_November_2009.pdf

    you see how the valuation moves from $1.40ish to $2.40ish using the forward curve for gold

    that is why I expect midcaps to at least double over the next year , with some going up a lot more, and quality juniors moving 3 to 5 times

    One part of the market which could move a lot is the high cost producers, that is the notorious WA gold stocks. Most of the WA goldmines are not payable under AUS$1000. In fact some arent even payable at AUS$1200 . But there are a few who have small toll millable open pit resources that could deliver significant cash flow at AUS1200 plus. If they also have good exploration ground then some of these guys will do very well. About time to! "

    happy xmas Pinto
 
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